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Engagement Letters

By Jeffrey P. Ayres
September 28, 2007

Engagement letters in the big law firm are like death, taxes, and timesheets. You can't live with them. You can't live without them. On the one hand, while many practitioners may not realize it, engagement letters are part of the attorney-client contract that defines the relationship between the parties. Typically, such letters are also ethically encouraged or required, depending upon the circumstances and jurisdiction. On the other hand, particularly when the law firm does not adhere to the engagement letter, big and unpleasant surprises can ensue.

This article identifies the general ground rules regarding engagement letters, the bells and whistles that such letters can contain for the good of the law firm, and the problems that can arise when lawyers don't pay attention to or fail to follow to the letters. It then discusses some of the systems that the law firm can implement to manage the engagement letter process. The three most important systems in that regard are as follows: 1) to develop template engagement letters that everyone must use, unless a designated partner permits exceptions for good cause shown; 2) to have centralized oversight of the process, in order to ensure that uniformity is achieved and that the engagement letters are maintained for recordkeeping purposes; and 3) to educate lawyers and other personnel to recognize the need for engagement letters and the problems that can arise in this area if the engagement letters are not accurate or are not followed.

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